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27/01/15 15:00

Richard Lochhead - Agricultural Holdings Legislation Review

Presiding Officer, we need vibrant agriculture in Scotland to support our rural economy, put food on our tables and deliver a range of benefits for society.

We are a lucky nation in that we have the land to ensure food security.

And we have men and women with the skills to work our land.

Tenant farming continues to play a vital role in our country.

Generations of tenant farmers often representing the same family on the same land, have worked hard and contributed to our country’s success.

Scotland’s total agricultural area is 6.2 million hectares - 79% of Scotland – and tenanted land makes up around a quarter of that [23% - 1.33 million ha] - making it a crucial part of Scottish agriculture.

Tenant farming like every other sector has undergone change and faces challenges.

Since 1982, there’s been a 42% decrease in tenanted land in this country, and Scotland now has one of the lowest proportions of tenanted land anywhere in Europe.

Given that securing a tenancy is often the gateway to a career in farming, we are in danger of closing the door on future generations unless we act.

One of the big challenges we face is our aging farming population - 57% of occupiers of farming businesses are over 55.

To ensure tenant farming thrives in the 21st century steps must be taken to protect the sector’s vital role.

Despite the progress of previous reforms to agricultural holdings legislation in 2003, and subsequent legislation brought in by this Government, there is a continuing decline in tenanted land.

This is why, at the Royal Highland Show in 2013, I announced a fundamental review of agricultural holdings, to come up with solutions to reverse this decline.

Today, I am announcing the outcome of the review.

This was a challenging remit.

It was essential to get the right people for the job.

Sir Crispin Agnew, Barbara Brown, Hamish Lean, Iain Mackay, Jeff Maxell and Andrew Thin brought their talents, expertise, passion and enthusiasm to the table and I couldn’t have asked for a better team.

From the beginning, the Review Group were clear we needed to talk to the people on the ground and to bring the industry with us.

Since the initial call for evidence in February 2014, the Review Group has held 78 meetings across Scotland and the Group are grateful to all those who made time to share their views and experiences, as the Group travelled from Bute to Blair Athol.

We have benefited from hearing first-hand of the problems and issues facing the sector, such as the:

  • The aspiring new entrant who can’t get a tenancy to provide a secure base for his business and young family; and

  • The tenant who wants to retire, but can’t until he has resolved a stand-off with his landlord over way-go compensation.

There were strong signs of success and innovation too, such as:

  • a young tenant and his landlord overcoming initial concerns and barriers to increase the holding and secure significant funding to grow a dairy business.

To back up what we heard, robust research was carried out as well as wide-ranging surveys of the sector.

Last June, we reflected on what we had heard and published our Interim Report setting out our vision and how we planned to develop our recommendations.

Since then, we’ve developed our thinking, undertaking 12 public meetings across Scotland.

So, today I’m publishing the Final Report of the Agricultural Holdings Legislative Review Group.

This significant package of 49 recommendations has the potential to be a turning point for the tenanted sector; and to secure a vibrant future for those working in the industry.

It’s bold, it’s radical.

The recommendations aim to get to the heart of the matter and address the 3 underlying issues affecting the sector:

  • The need for stronger, more productive relationships;

  • The need to address the right to buy debate; and

  • The need to provide opportunities for new entrants and a framework for the sector that’s fit for the 21st century.

Strong relationships are the foundations on which success is built.

Relationships with the land, the community – and most fundamentally, between tenant and landlord.

Around 82% of tenant farmers report having a good relationship with their landlord - and 89% of landlords agree. This shows much of the sector is working.

But others described relationships as poor, highlighting there are still issues to be addressed.

I don’t believe these issues are insurmountable.

The solutions will require effort and compromise from both sides – and we have seen great examples of this already.

In fact, one of the success stories of this process has been the facilitation of Industry-led Rent Review Initiative, highlighting the power to resolve relationship issues lies as much with the sector as it does with Government.

The Review Group’s recommendations are aimed at ensuring a strong role for the Scottish Government in working with the industry to promote better relationships, for example, by:

  • providing better support, guidance and oversight of the sector through the establishment of a Tenant Farming Commissioner and robust codes of practice; and

  • by designing a clearer, fairer process for setting rents based on the productive capacity of a holding, that will minimise disputes.

As I made clear when I announced this Review, it’s not possible to have a meaningful discussion on the future of the sector without addressing the issue of right to buy.

Over the last 18 months, this Review has facilitated an honest and frank debate, that’s helped to identify the reasons behind calls for an absolute right to buy.

The Group identified a loss of confidence in the system, concern over the lack of investment by landowners and the inability of tenants to realise their own, often substantial, investments and a general feeling of imbalance in the rights and responsibilities of 1991 Act tenants and landlords.

Of the Report’s 49 recommendations, the majority are aimed at addressing these underlying issues, such as the widening of succession rights to secure a future for 1991 Act tenancies.

However, it’s clear there are some holdings where tenants feel relationships have deteriorated to a point of no return and that a Right to Buy is the only solution – and is in the public interest.

The report, therefore, proposed a range of measures to enhance the right to buy including:

  • Strengthening the pre-emptive right to buy by removing the requirement to register;

  • Enabling 1991 Act tenants, where a landlord does not meet their obligations, to apply to the Scottish Land Court to force the sale of the holding; and

  • further consideration of how any proposals taken forward in the Land Reform Bill, could assist in addressing issues faced by tenant farming communities.

These radical proposals have the potential to provide tenants with a solution to escape the clutches of bad landlords – but for the vast majority of landlords who have good relationships with their tenants, these radical proposals pose no threat.

Life, like tenant farming, is built on mature compromise and by focusing on the path ahead.

We all need to look forward to the many opportunities that lie ahead and to ensure the tenanted sector is fit for the 21st century.

The Group are determined that tenant farming should play: an important role in providing routes for new entrants; security and flexibility for established businesses; and a dignified exit for older farmers.

The Review Group’s vision for letting vehicles and a legislative framework fit for the 21st century will help make the changes needed to make the most of the opportunities that lie ahead.

The Group recommendations are intended to provide greater flexibility, more innovation, more investment, more land and better security, by:

  • Providing for the conversion of a 1991 Act tenancy into a 35 year LDT to be assigned on the open market; and

  • Replacing SLDTs and LDTs with a new modernised assignable LDT with a minimum term of 10 years;

The Review Group have also proposed innovative and ground-breaking tenancy apprenticeships, through share farming, to help remove barriers faced by new entrants when trying to access land.

For those with some capital but lacking land the report proposes potential new vehicles to enable tenants to take on a greater share of fixed equipment and repair and maintenance obligations, in return for a minimum 35 year term and rents based on productive capacity.

These proposals have the potential to be game changers and to deliver greater, much needed, equality and diversity within the sector.

But for things to improve, people need to accept change.

I know that’s not always easy; but it’s essential for the tenant farming community to use the recommendations to make a real change to their lives and to their communities.

I’m confident this landmark Report represents a turning point for the sector.

We need a strong, vibrant and flexible sector - where traditions and experience are respected - where new ideas and new investment are encouraged - where farming businesses are built on the principles of shared endeavour for mutual gain – and where landlords and tenants respect and value the contribution that both can bring.

I commend this report to Parliament and look forward to working with members and the industry to achieve this vision for the tenanted sector in Scotland.